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NACCO INDUSTRIES INC (NC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered a clean turnaround: revenue $70.42M, operating profit $3.88M, net income $7.56M ($1.02 EPS), and Adjusted EBITDA $8.99M; prior-year comps were distorted by a $65.9M impairment in Q4 2023 .
  • Segment performance improved across Coal (higher unconsolidated earnings, lower SG&A), North American Mining (cost reductions), and Minerals Management (prior-year impairment absent), while consolidated gross margin held ~12% and net margin reached ~10.8% .
  • 2025 outlook: modest YoY increase in consolidated operating profit; Coal deliveries up modestly but MLMC faces a contract-driven per‑ton price reduction; North American Mining improving predominantly in 2H; Minerals Management comparable to 2024; Mitigation Resources expected to be profitable for full-year; pension plan termination to drive a significant non‑cash settlement charge, lowering net income/EBITDA vs 2024 .
  • S&P Global Wall Street consensus for Q4 2024 EPS and revenue was unavailable at time of request; no estimate beat/miss recorded. Liquidity remains solid: cash $72.8M, debt $99.5M, revolver availability ~$99.1M; remaining buyback authorization $8.5M .

What Went Well and What Went Wrong

  • What Went Well

    • Coal Mining segment returned to profitability: operating profit $2.02M and Segment Adjusted EBITDA $4.24M, aided by higher pricing at Falkirk and improved results at Coteau; deliveries increased to 6.13M tons (vs 5.53M) .
    • North American Mining posted operating profit of $0.81M (vs loss prior year) with Segment Adjusted EBITDA rising to $3.26M on reduced outside services and better pricing/mix net of reimbursed costs .
    • Minerals Management operating profit rose to $7.22M (vs $2.48M), with comparable revenues and Segment Adjusted EBITDA after removing last year’s impairment; portfolio expanded with a $15.7M Hugoton Basin investment expected to be accretive .
    • Management tone: “We delivered solid fourth quarter results…a strong finish to a successful year…full year Adjusted EBITDA up 116%” (CEO) .

  • What Went Wrong

    • Coal segment unallocated expenses increased and an unfavorable shift in other income/expense (higher net interest, lower investment income) tempered gains .
    • MLMC faces contractually driven price reduction in 2025 that will offset efficiency and volume normalization; segment operating profit expected to decrease modestly YoY .
    • North American Mining saw lower profitability in 2H 2024 due to reduced demand and lingering hurricane impacts in Florida; post‑hurricane demand bump not yet materializing .
    • 2025 pension plan termination will trigger a significant non‑cash settlement charge, expected to lead to a substantial YoY decrease in net income and EBITDA vs 2024 .

Financial Results

Metric ($USD)Q4 2023Q3 2024Q4 2024
Revenue ($M)$56.76 $61.66 $70.42
Operating Profit ($M)$(67.43) $19.70 $3.88
Net Income ($M)$(43.97) $15.64 $7.56
Diluted EPS ($)$(5.88) $2.14 $1.02
Adjusted EBITDA ($M)$7.09 $25.69 $8.99
Margin (%)Q4 2023Q3 2024Q4 2024
Gross Profit Margin %12.3% (7.001/56.757) 11.8% (7.244/61.656) 12.1% (8.476/70.418)
EBIT Margin %-118.8% (-67.434/56.757) 31.9% (19.699/61.656) 5.5% (3.883/70.418)
Net Income Margin %-77.5% (-43.967/56.757) 25.4% (15.635/61.656) 10.8% (7.564/70.418)

Segment breakdown (Q4 2024 vs Q4 2023):

SegmentRevenue ($M) Q4’23Revenue ($M) Q4’24Operating Profit ($M) Q4’23Operating Profit ($M) Q4’24Segment Adj. EBITDA ($M) Q4’23Segment Adj. EBITDA ($M) Q4’24
Coal Mining$19.75 $20.36 $(62.28) $2.02 $3.19 $4.24
North American Mining$26.46 $34.87 $(0.56) $0.81 $1.81 $3.26
Minerals Management$9.78 $9.74 $2.48 $7.22 $8.27 $8.08
Unallocated/Elims$0.76 $5.45 $(7.06) $(6.20) $(6.86) $(5.99)
Total$56.76 $70.42 $(67.43) $3.88 $6.41 $9.59

KPIs:

KPIQ4 2023Q4 2024
Coal deliveries (thousand tons)5,528 6,133
NAM tons delivered (thousand tons)12,477 11,785

Estimates vs Actuals:

MetricConsensus (S&P Global)Actual Q4 2024
Revenue ($M)N/A (Unavailable)$70.42
Diluted EPS ($)N/A (Unavailable)$1.02

Note: Wall Street consensus via S&P Global was unavailable at time of request; no beat/miss recorded.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Consolidated Operating ProfitFY 2025Perspective for improved 2025 results across segments (Q3 outlook) Modest YoY increase expected Clarified to “modest” increase
Coal DeliveriesFY 2025Continued solid demand in 2025; Falkirk concessions ended Deliveries to increase modestly; MLMC per‑ton price contract reduction; Coal operating profit to decrease modestly YoY Mixed: higher volumes, lower price; segment OP down
NAM Operating ProfitFY 2025Further improved 2025 results; contract amendments and expansions Improved results, predominantly in 2H 2025; 3 new/amended contracts with ~$20M NPV after-tax cash flows over 6–20 years Reinforced timing and NPV detail
Minerals Management Operating ProfitFY 2025Moderate production decline expected in 2025 (Q3 view) Operating profit comparable to 2024; 1H weaker, 2H improvement on commodity price/volume trends Shift to “comparable” with H2 recovery
Pension Plan TerminationTimingAnticipated non‑cash settlement charge in Q4 2024 Termination in 2025 with significant non‑cash settlement charge; substantial YoY decrease in net income/EBITDA vs 2024 Timing deferred; impact reiterated and broadened
Consolidated Capex ($M)FY 2024/2025~$69M in 2024; ~$38M in Q4 2024 ~$58M in 2025: Coal $13M, NAM $17M, Minerals $20M, ReGen/other $8M Lower capex in 2025; breakdown provided
DividendNov 2024$0.2275/share payable Dec 16, 2024 $0.2275/share payable Mar 17, 2025 Maintained rate
Share Repurchase AuthorizationAs of 12/31/24Program amended in Q3; ongoing $8.5M remaining under $20M program, expires end of 2025 Status update

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 2024)Previous Mentions (Q3 2024)Current Period (Q4 2024)Trend
Coal pricing & Falkirk concessionsFalkirk temporary price concessions ended June 2024; improving unconsolidated earnings Insurance recovery at MLMC; higher Falkirk management fee Coal OP up; 2025 MLMC per‑ton price set to decrease via complex formula Pricing tailwind at Falkirk; MLMC price headwind in 2025
MLMC operations & efficiencyMove to new mine area completed; improved mining conditions Efficiency gains; BI insurance $13.6M Volumes normalizing with plant back to historical operations; inventory write‑downs recurring (not adjusted out) Operational stabilization; ongoing inventory management
NAM demand & hurricanesNew phosphate contract; 2H moderation from 1H Lower profitability in 2H due to reduced demand/hurricanes Demand trending back toward normal; post‑hurricane bump not yet material Recovery trajectory, but gradual
Sawtooth/Thacker Pass lithiumReimbursed costs and fee structure; Phase 1 est. 2027/28 Phase 1 est. 2027; moderate income pre‑production Scope expanded to clay tailings transport; Phase 1 est. late 2027 Scope/fees expanding; timeline reiterated
Minerals portfolio strategyTarget up to $20M 2H investments; mid‑teens ROIC over time Expect declines vs 2023 after adjusting for impairment/gain $15.7M Hugoton investment; 2025 OP comparable to 2024; H2 stronger Accretive investments; balanced H1/H2
Pension plan terminationAnticipated in Q4 2024 Reminder of non‑cash charge Termination in 2025; significant non‑cash settlement charge Timing deferred; impact intact
Working capital & FCF2024 use of cash expected Revolver upsized to $200M; availability $130.9M (Q3) 2025 to be cash‑flow positive pre‑financing; WC tailwinds expected; inventory includes critical spares and mitigation credits Positive FCF pivot with WC normalization

Management Commentary

  • “We delivered solid fourth quarter results…Fourth quarter adjusted EBITDA of $9 million increased almost 27%…full year adjusted EBITDA of $59.4 million increased 116% year-over-year” (CEO) .
  • “North American Mining executed new and amended contracts…expected to deliver NPV after-tax cash flows of approximately $20 million over 6 to 20 years” .
  • On MLMC pricing: “Contractual formula…period‑over‑period changes in a basket of indices…producing a decrease in price…I view that as an aberration…should readjust to a more normal pattern” (CEO) .
  • On accounting approach: “We haven’t added [inventory write‑downs] back…because it has been recurring over the past year…included within our numbers” (IR) .
  • On Thacker Pass: “Scope…expanded to transport clay tailings…expected increase in our income…Phase 1 production estimated late 2027” (CEO) .
  • On capital discipline and FCF: “We expect significant annual cash flow generation beginning in 2025…conservative capital structure” .

Q&A Highlights

  • Coal segment EBITDA baseline and inventory write‑downs: Analyst suggested adding back ~$6M inventory write‑downs; management noted they’ve been recurring and are not adjusted out, leaving add‑back to investor discretion .
  • MLMC volumes and pricing: Volumes expected to strengthen with plant operations normalizing; pricing formula indicates a 2025 per‑ton price reset downward due to index dynamics .
  • NAM post‑hurricane demand: Trends moving back toward normal; a typical post‑hurricane bump not yet evident given three consecutive events .
  • Minerals price outlook: Management favors conservative assumptions on commodity prices/volumes; expects H2 2025 stronger than H1 .
  • Cash flow and working capital: 2025 cash‑flow positive before financing, with WC tailwinds (receivables timing, critical spares inventory normalization; mitigation credits as inventory) .

Estimates Context

  • S&P Global consensus estimates for Q4 2024 EPS and revenue were unavailable at time of request; no beat/miss determination can be made. Given limited coverage of NC, estimate availability can be sporadic; investors should re‑check as coverage updates [GetEstimates error; no values].

Key Takeaways for Investors

  • Clean quarter with normalized execution: revenue grew 24% YoY to $70.42M and net income reached $7.56M ($1.02 EPS), as prior-year impairment noise rolled off; margins were stable despite mix and OI&E headwinds .
  • 2025 setup: modest YoY increase in consolidated operating profit but headline net income/EBITDA will be depressed by a significant non‑cash pension settlement; position for multi‑year cash generation and capital deployment thereafter .
  • Coal narrative: structural pricing improvement at Falkirk (concessions ended) offsets MLMC’s contractual per‑ton price decline; deliveries modestly higher with plant operations normalizing—watch the MLMC price index reset and inventory management cadence .
  • NAM inflection: contract wins/extensions (NPV ~$20M) and underwater dragline/surface miner expertise underpin 2H 2025 profit improvement; hurricane demand recovery remains the swing factor .
  • Minerals: portfolio accretion via $15.7M Hugoton investment; 2025 operating profit comparable to 2024 with H2 commodity tailwinds—manage expectations given management’s conservative stance .
  • Mitigation Resources: expected full-year profitability in 2025; credit releases and service projects can drive mid‑teens ROCE—monitor permits/credit timing .
  • Capital/returns: liquidity solid (cash $72.8M, revolver availability ~$99.1M); buyback authorization $8.5M remains; 2025 capex guided to $58M, mixed across segments—potential for opportunistic repurchases as cash flow inflects .